I also had problems with iCloud. I use a Mac Pro, a Macbook and an iPhone 4S, all running the latest operating systems.
It seems the best way to overwrite iCloud's bookmarks is to have two Mac computers -- I couldn't get the below to work using one computer and one phone only.
What I did was turn off bookmark synching in Sys Prefs > iCloud on both computers and on the phone.
Then I deleted all bookmarks in Safari on both computers and on the phone.
Then I turned on bookmark synching on the computers only.
With Safari open on both computers, I checked that no bookmarks appeared in the bookmarks bar. I actually had to try a few times to delete bookmarks because it seems there was some old stuff in the iCloud "pipeline" which kept being synched to the computers.
Eventually, however, the bookmark bar on either computer was nicely empty and clean. This is what I meant above - two computers synching empty bookmark bars seem to "flush" iCloud's bookmarks. I couldn't get this to work using one computer and the phone (ymmv of course).
Then I turned on synching on the phone, waited a bit and checked that Safari didn't have any bookmarks.
The next step may seem odd: I turned off synching on the Mac Pro before importing my bookmarks from an html backup. Because iCloud seems to synch continually, I wanted to avoid getting only some bookmarks synched while the Mac Pro was busy importing. Perhaps an unnecessary step.
After the import, I verified that the Mac Pro's Safari had a complete set of the bookmarks in the bookmarks bar (the imported bookmarks end up under a separate "imported 2011-xx-xx" heading so I moved them manually to the bookmarks bar).
Then I activated the Mac Pro's bookmarks synch in Sys Prefs. The message "Do you want to merge bookmarks with iCloud?" appeared and I clicked Merge (btw it is very odd how limited iCloud's functionality is in this respect).
I checked on the Macbook and on the phone that Safari updated the bookmarks bar as the Mac Pro's bookmarks were "merged" with iCloud's empty set.
Fwiw, hope it helps someone.
/p